Mortgages - The Basics


Mortgages are one of the largest single transactions in most people’s lives. Buying a property can be a stressful and time consuming experience, although nowadays the financing of a mortgage is a case of finding and selecting the most suitable mortgage, rather than simply accepting a lender’s offer.

Banks, building societies, and smaller niche lenders compete for your business, all offering a variety of interest rate deals, associated fees and other enhancements to attract borrowers.

There are main methods of repaying a mortgage, capital and repayment and interest only. It is also sometimes possible to set this up using a combination of the two. A description of these methods is provided below.

Repayment (capital and interest) Method

Under the repayment method your monthly repayments consist of both interest and capital hence, over time, the amount of money you actually owe will decrease. In the early years your repayments will be mainly interest and therefore the capital outstanding will reduce slowly in the early years.

This method ensures that the mortgage is repaid at the end of the term providing all payments are made on time and in full. 

Interest-only Method

As the name suggests, with the interest only method you only repay the interest on the amount borrowed. At the end of the term the capital is still outstanding. Therefore you will usually need to take out some kind of investment policy to save up enough money to repay the mortgage at the end of the term.

Traditionally the preferred product for repaying the capital of an interest only mortgage was a mortgage endowment policy (which included a set amount of life cover) – although more recently customers are using Individual Savings Accounts (ISAs) and pensions to build up a sufficient sum and taking advantage of the tax breaks offered by these products. 


As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments

New Start Mortgages & New Start Money are trading names of Mortgages TLC Ltd is Authorised and Regulated by the Financial Conduct Authority. Financial Services Register Number 302979.
Registered in England & Wales, Company Number 04411706 . Registered Office address: 11 Church Terrace, Oldham , OL1 3AT . Trading address: Same as registered. Telephone: 0161 628 2223

New Start Insurance Brokers Ltd is Authorised and Regulated by the Financial Conduct Authority. Financial Services Register Number 502256. Registered in England & Wales, Company Number 06876289 . Registered Office address is 28a Church Lane, Marple, Stockport SK6 6DE. Trading address is 11 Church Terrace, Oldham, Lancs. OL1 3AT Telephone : 0161 628 2223

The guidance and or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted to customers in the UK.

© 2017 New Start Mortgages & New Start Money  | Regulatory Information | Login | Cookie Policy |

New Start Mortgages & New Start Money are trading names of Mortgages TLC Ltd is Authorised and Regulated by the Financial Conduct Authority. Financial Services Register Number 302979.
Registered in England & Wales, Company Number 04411706 . Registered Office address: 11 Church Terrace, Oldham , OL1 3AT . Trading address: Same as registered. Telephone: 0161 628 2223
The guidance and or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted to customers in the UK.
© 2017 New Start Mortgages & New Start Money are trading names of Mortgages TLC Ltd | Regulatory Information | Login | Cookie Policy